OPEC’s Control Seen Slipping as U.S Eyes Refiners

While a Senate subcommittee examines recommendations to crack down on oil companies charged with manipulating supply to prop up fuel prices, the world’s main oil cartel is having trouble keeping the price of crude oil where it wants it, news reports said Friday.

The price of oil is related to the price of diesel fuel.

Paul Skinner, chief executive for oil products at Royal Dutch/Shell, told Bloomberg News that increased production by rival producers may push world prices below the $22-$28 a barrel range set by the Organization of Petroleum Exporting Countries.

Skinner said countries like Russia and Norway, which joined in restraining supply for the first half of the year, have signaled they plan to increase production after June 30.

He said a natural price for crude oil would be between $15 and $20, Bloomberg said.

In the United States, however, the Wall Street Journal reported that attorneys general from three states have urged the Senate Government Affairs subcommittee to consider tighter antitrust laws, and to require refiners to maintain increased inventories to prevent the shortages that lead to higher pump prices for gasoline.

Other suggestions included banning zone pricing, in which refiners group retailers into small geographic areas and charge them different prices for the same product.

Also suggested was a new strategic-fuels reserve that could be tapped when prices begin rising, the WSJ said.

Oil industry experts urged the subcommittee to eschew such measures, and said price volatility is not a problem that should be solved with regulations.

Instead, they suggested reducing the number of specially blended fuels and easing Environmental Protection Agency rules to allow construction of more pipelines.

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